April Retail Sales

Retail sales came for April growing .3% from March, but March was revised higher at .8% growth instead of 6% originally reported. So April’s number was actually .5% higher if March was not revised up by .2%. The important point here is that consumers spent more money in the last two months probably helped by the cut in taxes and a very good jobs market. The spending is sustainable, a very good sign that GDP in the spring quarter will be better.

This sustainable growth will likely not push the Federal Reserve, so that means we will see rate increases as predicted rather than a push to move them faster and higher. Retail sales at this pace will not cause any more pressure on inflation and we have seen very little wage inflation so far despite a tight labor market. Inflation is assumed to be coming but that outlook is moderate.

It looks like Goldilocks for a while and that’s not bearish for the stock market.